Always know the balance of your credit card, and where you are at with your finances. This shows financial responsibility which is crucial in owning a credit card. This way you will never be surprised by an over due balance. It also protects you against CC theft…if you are constantly aware then you will know immediately if a charge goes onto your card that you did not make.

Tip #2- Pay off your balance every month

There are sometimes emergency situations where we have to charge our credit card with money we may not have…like medical bills for example. Besides those extreme cases you should not ever charge the card if you do not have the money to pay it off at the end of the month. This is where the trap of credit card debt, and ever rising interest happens.

Tip #3- Never miss a due date

There are a few things that you can do to help you with this one….if your due date comes on a bad day of the month then switch it! Maybe to the day after you get paid, or another day that works better for you. Another option is setting up automatic pay..now you only want to do this if you know you will have money in the account that is paying it off otherwise you’ll get charged overdraft fees. Figure out whatever you need to to make sure you get that payment in on time!

Tip #4- Be aware of your own limits

You don’t have to tempt yourself if you know that it will be difficult to make the right decision. Just because you can have a $10,000 limit on your credit card doesn’t mean that you have to! If keeping it small is better for you then do that! If it’s hard not to charge random “wants” then don’t carry it around with you all the time. I don’t know what your limits are, but you do. Having them isn’t a bad thing…..ignoring them is! So find ways to use your credit cards according to your limits and what works for you.

Tip #5- Pay off debt

It’s an unfortunate reality that a good portion of you reading this have some sort of debt, that doesn’t mean you are a horrible irresponsible person, it just means you should have a goal to pay it off! Try to pay more than just the minimum monthly payment, but make sure that you are at least paying that. I know it seems like a never ending road to be debt free, but I promise you can get there…set a goal, and make realistic plans that may need some sacrifice, but it will be well worth it!

Tip #6- Find a rewards card

There are lots of them out there, so figure out which one is best for you. It’s okay to have more than one, but be aware of signing up for too many credit cards. Rewards cards often have super high interest rates, so be sure to use them only if you pay off the balance each month. If you are smart though, they can really pay off and earn you free stuff!

Tip #7- Don’t exceed 30% of your credit limit

This will help your credit score go up. For example if you have a $1,000 credit card limit then you shouldn’t exceed a balance of about $300. This applies to all of your credit as a whole though…it’s not for each card…so if you have 3 credit cards with a total limit of $10,000 and you have a balance of $3,000 but it’s all on one card….that’s okay because it’s still only 30% of your available credit.

Tip #8- Learn about card benefits

Most credit cards have benefits that you don’t know about, so research the cards you have and find out what they are and use them to your advantage!

Tip #9- Use it to benefit your budget

Use your card for all of your purchases throughout the month, this way you can track all of your expenses and know exactly where all your money has gone. This is only a good idea if you know that you can stick to your budget and spend only what you are supposed to so that you have enough to pay it off each month.

Tip #10- Be aware of hidden fees

This goes for all fees associated with your credit card, but I want you to especially focus on this when traveling outside the country. Find out if you are going to be charged extra fees each time you swipe your card and what they are for. Don’t just assume that every credit card will work the same, do your homework and make sure that YOU are the one in charge NOT the credit card company.

We can never be too educated on something like credit cards, and how to use them properly. They are an amazing tool, but also can be a scary trap. Here are 4 credit card traps that a lot of people don’t know about that can help you in the long run.

Interest

We all know about interest (at least I hope you do if you own a credit card), but what you need to be aware of is how credit card companies use it to their advantage. First by having an incredibly high interest rate. They can make it seem like the best deal around, but unless you really take your time and look around you won’t know if you really are getting a good deal on that rate. Also, make sure you know the fine print of their interest charges. Some companies if you are late even one day on a payment can seriously increase your interest rate. Take the time to research….better safe than sorry.

Fees

Credit cards usually have 2 kinds of fees….punishment fees, and transaction fees. Punishment fees are usually your fault and can be avoided.. such as late fees, or a returned payment etc. They can be avoided by you being aware of your account and all activity that is taking place. Transaction fees are where credit card companies can really get you, so be aware of what they are with your particular credit card and if they are worth it. Examples include cash advance fees, foreign transaction fees, and annual fees.

Minimum Payment

If you pay your credit card online there is usually a minimum payment due. It’s easy to make that minimum payment and feel like we are good to go until next month. This is exactly how they want you to feel. That minimum payment is such a small % of what you owe that it will take years more to pay it off and the interest you acquire during that time can be ridiculous, and the credit card company is making a lot of extra cash off you! Instead figure out how long until you want to have that card paid off, and you decide what your monthly payment needs to be to get there. Ignore the minimum payment altogether.

No Annual Fees

Some credit card companies will advertise “No annual fees” and this makes us automatically assume that there will be no annual fees for having their card right? Well a lot of times if you read the fine print what they aren’t telling us is that there is no annual fee IF you reach a certain spending limit. So, if you don’t use the card enough you will be charged an unexpected annual fee. Again I can’t stress enough to read the fine print and do your research. Credit card companies…like so many others…will get you to see only what they want you to see.

I am going to play devil’s advocate here. WHAT IF… credit cards were good? So often we hear all the bad and dangers about credit cards. Today, lets focus on the GOOD associated with credit cards and the reasons you should be using them, responsibly.

1. Credit Cards Establish Credit History

There are many ways you can create credit history, but the easiest is definitely by using credit cards. For ten years, our goal in marriage was to get completely out of debt and we accomplished this at the 10 year mark- yay us! We were debt free (minus the mortgate) and we were so excited! We didn’t have any other debt. In fact, I didn’t even own a credit card. I am so responsible! Long story short, after applying for a store credit card for an enormous discount on school clothes, I was given a $200 dollar limit, which was just insulting. I was shocked and a little confused. I should have stellar credit! The truth, is that I had NO credit. My name wasn’t on most of our previous loans, to make financing simpler. So we applied for a skymiles credit card and started using it in our everyday life. All the bills were automatically charged on the card and I pay it off monthly. My credit score has dramatically increased and I am establishing a credit history, which will make other financing or other things a little easier.

In order to qualify for a home loan, or other financing, you will need a credit history to get approved. Credit history is different from your credit score because it shows how long you have had credit, and whether or not you are using it. So, the best way to create a credit history is by using your credit cards and then paying them off each month before you acquire interest.

2. Simplicity

If you don’t have a credit card, it can make life a little tougher. You can’t even reserve a rental car without a valid credit card (yes, some will take debit cards.) If you have a credit card, you can use it to pay all of your bills, set up automatic payments, etc. I am weary of having automatic payments charge my debit cards. I have had companies maker errors and take out more money than expected, and it can really mess you up if the money comes out of your checking account when you aren’t expecting it. I like to be able to review my charges and be sure everything looks right and then pay my statement.

Using a credit card for all of your purchases makes paying bills so easy and great! Each month, you check your statement, review your purchases and pay your statement, and you are all done! This is a method you should only use if you are very disciplined and do not spend more than you have budgeted each month. If you aren’t careful, you can find yourself with a balance. Only do this if you spend less than you make and are good at keeping your expenses less than your income. It can get away from you pretty quickly, if you don’t pay attention and spend like a sailor, only to find that you are short at the end of the month.

And if you can do this, congratulations. This shows great self-control and responsibility.

3. Improves Your Credit Score

When you have and use a credit card, it will help you raise your credit score. As long as you are careful and pay your bill each month on time and are careful not to be late, your credit score will improve. Also, if you keep your balance below 50% of your credit limit, and pay regularly, you will have a higher credit score than if you didn’t have or use a credit card at all. As I mentioned above, it is important to have some sort of credit history. Don’t let your cards sit dormant. Use them, pay them off and keep them active. Be careful not to apply for a million cards, hoping to improve things “quicker.” Each time you apply for a credit card or loan, your credit takes a small hit. So be thoughtful in which cards or loans you apply for.

4. Credit Card Rewards

Yes, yes and yes!! I can’t believe I missed out on credit card rewards for most of my life. About a year ago, I got a Capital One rewards card. I put absolutely every expense we have on my new rewards card, and we will be able to take my family of 6 on a pretty great vacation next summer, using only our rewards. If you are spending money anyway, you might as well get paid for it. I have all of my monthly bills, excluding my mortgage automatically charged to my Capital One rewards card and I get 2 points for every dollar that I spend. School shopping, Christmas gifts, and oh so many medical bills the past year. My only regret is not having done it sooner. If you are wondering what the best credit card rewards program is, you can see my summary of the different offers here.

Be sure to read all terms and conditions and use the card the way it is intended. If you rack up a balance and pay lots of $$ each month in interest, it isn’t really worth it. I only use my card for the purchases I make each month anyway, and then I pay it off on payday each month. That way, I pay no interest but I get the rewards. It is perfect for someone that is disciplined enough to spend that way and budget to be sure the money is there to pay off when the statement arrives.

Remember I am not discrediting the warnings against using credit cards. They are a common pitfall for acquiring unnecessary debt. If you can be financially responsible and use credit cards in a positive way, they can benefit you in many ways.

Read more about credit cards, budgeting and more in my Getting Out of Debt Series below:

The debt snowball method is very motivating because you will start to see results quickly! To get started, organize all of your debts from the lowest balance you have to the highest balance, regardless of the interest rate they have.

Then, pay your minimum payments on each of your debts, but pay as much extra as you possible can on the lowest balance debt. You will have to work hard to put the most money you can toward this expense until it’s gone. Don’t try to pay a little bit of extra money toward the other ones. If you have the extra money, send it all to the lowest debt on your list.

Once the first debt on your list is completely paid off, you’ll feel great. It is very motivating and seeing that debt disappear is very exciting. Now, take the payment plus the extra amount that you were used to paying on the small debt and apply it to the next smallest debt. You will end up with even more money at this point to send to the next debt item on your list because you will no longer owe money toward the debt you just paid off.

As you start paying off debts, you will be able to save more and more money to apply to your next debt. The amount of money you have will grow and grow (like a snowball) until you eventually reach a debt avalanche.

The debt snowball method works and will bring fast results! Not only will you have your debts paid off quickly, you will feel great doing it.

For other great ideas on getting out of debt, see these related articles:

I am passionate about getting out of debt because it changed my life. It isn’t easy. It isn’t even fun sometimes, but the freedom you feel from living within your means will completely change you and you will never go back. When I talk to people about their financial situations, it is clear that in some cases, a change in income needs to be made. Aside from the obvious budget re-alignments, and more self-control, sometimes, we simply need to figure out a way to make more money or we won’t get ahead. Here are a few things that can help you get out of debt.

Cut back on groceries

Grocery budget is one of the first to modify, because it isn’t a “fixed” cost. Find meals that can go a long way on a small amount of money. Take advantage of deals, coupons, discounts. Depending on the size of your family, it may even be cheaper to eat out a couple of meals a week. I know that I can’t grocery shop and make a meal and feed my family for less than a 5$ pizza from Little Caesars. So, once in a while, we do that. Especially at the end of the month, or right before payday. Be savvy and discover what works for your family.

Work from Home

There are so many side jobs or even full time jobs that are home-based. This can give you more flexibility, and save on gas (no commuting!)

Use the Debt Snowball method

This is an incredible method that can work for anyone! It also works quickly, and keeps up the momentum of getting out of debt. This works by organizing your debts from the lowest balance you have to the highest balance (regardless of the interest rate they have) and you work hard to pay off the debt for the first item on your list. To understand the full process and how it works read Pay off Your Debt With a Debt Snowball.

Transfer Balances

Most of you have had a credit card offer mailed to you offering to “transfer balances” for a low interest rate. Thisis the good kind of junk mail and can really help you get your debt under control. The problem with debt is that you accrue interest. This can keep you in debt forever, unless you make bigger payments, or stop the interest from accruing. Some cards have offers to transfer balances from other cards to their card for a 0% interest rate (or low, like 3%) for a certain amount of time. When we were trying to pay off credit cards, we transferred balances from one card to the next, keeping 0% interest rates. This made our payments go to the entire principle amount and we paid them off MUCH faster than we would have at a standard 12% interest rate. Be careful to read the terms and conditions of these offers. Often, there are transfer fees (which can still be worth it, depending on your account balance and what would be saved from the interest) and other terms you will want to be aware of. Something many people don’t know, is that if you are also using your card, and accruing interest on purchases, you actually only pay off the 0% first, which means you accrue interest on the purchases the whole time. In a nutshell, to save the most money, transfer balances to a card that you don’t plan to use for purchases, and pay the most you can while the rate lasts. Don’t be late making a payment or you forfeit your low rate.

Budget

To make sure you are organized and get control of your finances, it is important to budget. Knowing where your money is going every month is half the battle. Most people that have money trouble truly don’t have a great grasp on what it takes for them to live and where their extra money is going each month. Years ago, we had the same problem and didn’t feel that we were spending much extra. After going through our monthly expenses, we realized that we were each eating out for lunch 4+ times each week. Even if we only spent 5$ (which we didn’t always) times that by 2 of us, that is 40$ each week (almost $200+) just on lunches. That was more than half of our food budget each month, at the time. If you know your budget and stick to it, this will help you to get out of debt, and stay out of debt! For great ideas on budgeting ideas, click How to Budget When You Don’t Make Enough Money.

Make homemade products

Save money by making things at home out of household products. You can make your own household cleaners, lotions, laundry detergents, hair products, and more. You will be amazed at how much money you can save every month, simply by making your own stuff that calls for supplies you most likely have around the house anyway (many products require common items like baking soda, vinegar, oil, soap, etc.)

Simplify

When something in your house breaks or starts to wear down, try to get creative with how you can replace that item. If your bathroom rug unravels ask yourself, “Do I really need another one?” You can always put a towel down instead or find some other item that would work. When you start to do this with scrub brushes, paper towels, tin foil, and other common household items you will be able to cut back a lot, save money, and live a more simplistic lifestyle.

Financial Fast

Have you ever heard of a financial fast? This might sound hard at first, but if you can master this you will feel so rewarded you will want to go… shopping! Just kidding, don’t do that! But really, it is very rewarding to exercise your self-control. If you normally buy extra things you want through the month, or take full advantage of Amazon Prime like we do at our house, just don’t spend any money for a month. Obviously you need to buy food and pay rent, etc., but cut out restaurants, extras, clothes you think you need and more. The trick is just to only take care of your essential needs and don’t buy anything else. It takes some diligence and resistance to fight the urge to buy things, but the more you turn down the items you really don’t need, the easier it gets! You will be amazed that it is possible for your bank account to almost stay the same. It is a great feeling and after you do it once, you will want to do it again.

Sell Your Stuff

To make money, try to sell items that you can find for free. Online there are advertisements where people are getting rid of things, as long as you come pick up the item yourself. You can find these on local classifieds, Craigslist, social media groups, the newspaper, or even just driving by peoples’ houses where they have items on their lawn with a “free” sign. You can also contact people you know that are moving and see if they have items they are getting rid of. Collect those items, and then turn around and sell them! You will make 100% profit.

Be Savvy

How many times have you purchased something, and then you see it go on sale for even less money the next time you are there? To get the most bang for your buck, pay attention to sales, discounts and store promotions.

Make More Money that You Spend

There is a pretty hilarious segment on Saturday Night Live spoofing this idea, but it is true. And unfortunately, it has to be said. Figure out how much money you have to live on, and live on less than that. There are many circumstances that don’t make this always possible. Medical emergencies, unexpected car repairs and so many more. The key is to make the “unexpected” expenses “expected.” Be sure to budget for birthdays, holidays and even car repairs. Unfortunately, you may realize as you go over your income and your expenses that you simply do not make enough money to meet your monthly needs. This is the time to make fundamental life changes. Maybe a job or career change, living in a different place, or taking on side jobs to make extra money. This can be a sobering reality, but a reality nonetheless. Take the challenge and change your circumstances.

Take Advantage of Free Activies

Research the museums, festivals, and activities in your community that are free to attend. This will make the burden of saving or a financial fast much more bearable. There are so many activities in the community that are usually free, that you should have no problem still living as you save. There is no question that it is hard and that it takes self-control and discipline that may not be fun. But if you put your best foot forward and make the necessary changes, you will live in financial freedom instead of bondage.